As a result of a downtick in same-store sales and customer traffic levels, the National Restaurant Association’s Restaurant Performance Index (RPI) fell below 100 in November. The RPI – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – stood at 99.9 in November, down 0.8 percent from October. The decline marked the first time in three months that the RPI stood below 100, the level above which signifies expansion in the index of key industry indicators.
"While the RPI’s November decline was largely the result of softer same-store sales and traffic performances, it doesn’t necessarily mean the industry’s recovery is in peril," said Hudson Riehle, senior vice president of the Research and Knowledge Group for the NRA. "Like the economy as a whole, the restaurant industry’s road to recovery will be one with occasional bumps along the way.
"Overall, the economic fundamentals of the restaurant industry remain positive, which will likely lead to stronger sales results in the months ahead."
Current Situation Index
The Current Situation Index, which measures current trends in four industry indicators – same-store sales, traffic, labor and capital expenditures – stood at 98.7 in November, down 1.3 percent from October and the first decline since May. November’s decline came on the heels of the Current Situation Index reaching the 100 level in October, the first such occurrence since August 2007.
For the first time in three months, restaurant operators reported a net decline in same-store sales.
- 40 percent of restaurant operators reported a same-store sales gain between November 2009 and November 2010, down from 51 percent of operators who reported higher same-store sales in October.
- 44 percent of operators reported a same-store sales decline in November, up from 33 percent of operators who reported negative sales in October.
Restaurant operators also reported a net decline in customer traffic levels in November.
- 36 percent of restaurant operators reported an increase in customer traffic between November 2009 and November 2010, down from 44 percent of operators who reported higher traffic in October.
- 45 percent of operators reported a traffic decline in November, up from 34 percent in October.
Along with softer sales and traffic levels, capital spending activity dropped off somewhat.
- 40 percent of operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months, down slightly from 42 percent of operators who reported similarly last month.
The Expectations Index
The Expectations Index, which measures restaurant operators’ six-month outlook for same-store sales, employees, capital expenditures and business conditions, stood at 101.2 in November – down 0.2 percent from October and its first decline in four months.
Although the overall Expectations Index declined in November, restaurant operators remain relatively optimistic about sales growth in the months ahead.
- 42 percent of restaurant operators expect to have higher sales in six months, roughly on par with 43 percent who reported similarly last month.
- 14 percent of restaurant operators expect their sales volume in six months to be lower than it was during the same period in the previous year, up slightly from 12 percent who reported similarly last month.
Restaurant operators also are generally optimistic about the direction of the overall economy.
- 37 percent of restaurant operators said they expect economic conditions to improve in six months, up slightly from 35 percent last month.
- 15 percent of operators said they expect economic conditions to worsen in the next six months, up from 12 percent who reported similarly last month.
Buoyed by a positive outlook for sales and the economy, restaurant operators’ plans for capital expenditures remained relatively steady. Forty-seven percent of restaurant operators plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, compared with 48 percent who reported similarly last month.
For the second consecutive month, restaurant operators reported a modestly positive outlook for staffing gains in the months ahead. Sixteen percent of operators expect to increase staffing levels in six months (compared with the same period in the previous year), while 14 percent plan to reduce staffing levels in six months.